Determining inventory policy for perishable goods with transshipment possibilities based on sufficiency and insufficiency point

• Main Authors: Cheng, Clint, Cua, Andrew, Kua, Ted
• Format: text
• Language: English
• Published: Animo Repository 2016
• Subjects: Transshipment; Shipment of goods; Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/9369
• Institution: De La Salle University

Because of the continuous growth of various industries, the focus of inventory management for perishable goods have created an opportunity to satisfy more demand spanning over a geographical area, but along with the opportunity, new problem arises as management are now facing the challenge of handling the inventory from a network of retailers. Different alternatives are provided by other literatures to minimize the risks of handling inventory such as forecasting, external parties, and transshipment between retailer. Incorporating transshipment has become a considerable option for retailers to become flexible in situations where stockouts and perishability could occur. The study aims to minimize the overall inventory risks by introducing two limits in the inventory level, wherein retailers would be able to optimize the reallocation of inventory with respect to transshipment. A mixed integer linear programming model (MILP) was then made to optimize the placement of these two limit, called the sufficiency point (SP) and insufficiency point (IP). In modelling process, the location of the SP and IP points in the inventory level became the decision variables of the model, and was assumed to adjust with respect to the demands of the succeeding periods. Conclusions showed that the model was able to work under various scenarios, with being able to decide whether transshipments are to occur or not. On further analysis, the application of transshipment under a network of retailers were found to be considerable on situations wherein order quantity would be relatively small, otherwise, daily deliveries would be more favorable.